Direct Materials and Direct Labor Variances At the beginning of June, Bezco Toy

Question

Direct Materials and Direct Labor Variances

At the beginning of June, Bezco Toy Company budgeted 25,000 toy action figures to be manufactured in June at standard direct materials and direct labor costs as follows:

The standard materials price is $0.6 per pound. The standard direct labor rate is $12 per hour. At the end of June, the actual direct materials and direct labor costs were as follows:

There were no direct materials price or direct labor rate variances for June. In addition, assume no changes in the direct materials inventory balances in June. Bezco Toy Company actually produced 21,800 units during June.

Determine the direct materials quantity and direct labor time variances. Round your per unit computations to two decimal places, if required. Enter a favorable variance as a negative number using a minus sign and an unfavorable variance as a positive number.

Explanation / Answer

Standard direct material cost on 21800 units = 52500/25000*21800 = 45780

Standard direct labour cost on 21800 units = 21000/25000*21800 = 18312

When company do not have direct material price and direct labour rate variance then variance in cost for due to time and quantity variance :

Direct material quantity variance = 45780-47200 = 1420 U

Direct labour time variance = 18312-18900 = 588 U

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